St Jude's shares drop, seeks journal retraction

CHICAGO, April 9 (Reuters) - Shares of St Jude Medical Inc fell nearly 5 percent on Monday on concerns that a drumbeat of negative news about its heart rhythm products will hurt sales of the medical device company’s main franchise.

St Jude on Friday called on a medical journal to retract an article about patient deaths associated with its Riata defibrillator leads, saying the manuscript contained errors and biased analysis. Leads are insulated wires that connect implanted cardioverter defibrillators (ICDs) to the heart.

The article in the journal HeartRhythm concluded that St Jude’s Riata and Riata ST leads are prone to failures that have led to deaths. Although the article was published March 26, St Jude’s call for a retraction drew attention to the article only days after the company said it was halting sales of two other types of leads.

Investors feared that more scrutiny of the company’s leads ultimately could hurt sales, said Jefferies analyst Raj Denhoy.

“The concern is that this could have a chilling effect on the company’s ICD sales,” Denhoy said.

The article’s author, Dr. Robert Hauser of the Minneapolis Heart Institute Foundation, examined deaths reported in a U.S. Food and Drug Administration database.

“These failures appeared to be caused by insulation defects that resulted in short-circuiting between high-voltage components,” Hauser wrote.

Hauser’s team also looked at deaths associated with Medtronic Inc’s Quattro Secure leads, and found fewer deaths linked to that product.

St Jude, in a press release, said its own analysis of the FDA database could not reproduce the numbers reported in the HeartRhythm article. The company also criticized the use of the database to evaluate rates of adverse events and to compare devices.

A spokeswoman for the Heart Rhythm Society, publisher of the HeartRhythm journal, could not be reached for comment on St Jude’s request for a retraction.

St Jude, which stopped selling the Riata leads in December 2010, last November advised doctors that the leads have a higher rate of insulation failures than initially reported. The company advised against removing or replacing the leads.

The company said it had reports that two patients had died and one had suffered a serious injury during procedures to remove the leads.

FDA subsequently classified St Jude’s advisory as a recall.

Last week, St Jude halted sales of two more brands of lead wires used in its cardiac resynchronization therapy devices due to worn insulation. Those products, the QuickSite and QuickFlex leads, connect to the heart a device that uses a specialized pacemaker to re-coordinate the action of the right and left ventricles in patients with congestive heart failure.

“St Jude shares will likely remain under pressure as investors remain anxious about the possibility of more negative lead news,” Leerink Swann analyst Rick Wise wrote in a note to clients.

St Jude shares fell $1.97, or 4.8 percent, to $39.00 in afternoon trading on the New York Stock Exchange.